Not to be graded
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Neiman Marcus trying to 'rebalance' merchandise lines
12:00 AM CDT on Thursday, March 12, 2009
Neiman Marcus Inc. CEO Burt Tansky insists that he's not ditching luxury or full-price selling but is trying to "rebalance" store mix to include more moderate prices.
As Ray Vlk, 80, waited for a bus under the covereiman Marcus awning to stay dry in downtown Dallas on Wednesday, the luxury retailer was experiencing a rainy day of its own in reporting its earnings results." width="175" height="113">The best and most expensive brands demanded by wealthy customers will remain, he said Wednesday. But aspirational shoppers will find more in their price range.
Based on modern-day accounting records for the almost 102-year-old company, Neiman Marcus posted its first holiday-season loss. Tansky called the economic conditions "unique and unprecedented."
Neiman Marcus is asking some of its best vendors and designers to come up with goods that are below luxury and above bridge lines, but he declined to name any. Many small vendors will be cut from the mix.
Some of the new merchandise may be in stores by fall, but mostly in November and December and spring 2010, Tansky said during a conference call to report fiscal second-quarter earnings.
Stores will also keep basic inventory for more than one season in categories that don't have a strong fashion focus, from men's black socks to basic navy suits, said chief financial officer Jim Skinner.
Some merchandise in beauty and jewelry will also be carried forward, reducing future purchases, he said. The company is still trying to get inventories in line with demand and is canceling orders, returning merchandise and splitting the cost of markdowns with vendors.
Spring merchandise in stores now was purchased eight months ago, Tansky said. "The economy was shaky then, but expectations weren't anything like what it became."
Asked if he thought the customer was holding back until merchandise is discounted, he said, "I don't know if she's waiting or not." Sales trends remain weak, but the company has no plans to accelerate its "First Call and Last Call" sales this spring, he said.
In January and February, Neiman Marcus cut 825 jobs, a 15 percent reduction from a year ago. Some cuts are from consolidating jobs in multiple-store markets. Instead of a visual display manager at each store, now there's one per market.
The Dallas-based company reported its first loss in a holiday quarter, reflecting deep discounts offered during the Christmas season as customers drastically cut spending.
It reported a net loss of $509.3 million in the quarter ended Jan. 31, compared with net income of $44.3 million a year ago. Excluding noncash impairment charges of $560.1 million, the adjusted operating loss was $32.6 million.
The reduction in asset values reflects projections for reduced cash flow, revenue and profitability.
Total revenue fell 21 percent to $1.08 billion from $1.37 billion a year ago. Same-store sales fell 22.8 percent in the quarter.
Higher consumer delinquencies from credit card customers required Neiman Marcus to pay HSBC maximum contractual obligations. (Neiman Marcus sold its credit card business to HSBC in 2005.) The retailer paid HSBC $3.1 million during the just-completed quarter and $5.3 million so far in fiscal 2009.
Source: http://www.dallasnews.com/sharedcontent/dws/bus/industries/retail/stories/DN-neimanmarcus_12bus.ART0.State.Edition1.4a948c1.html
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